At a time when conviction rates for even heinous crimes are hardly encouraging across the country, the Income Tax department (TN and Puducherry), has got two more convictions, the department’s seventh and eighth during the financial year 2023-24, for offences committed under the Income Tax Act, 1961.
During 2013-14, Dilip Kumar Mehta and Praveen Kumar Mehta from Chennai, had failed to file their IT returns despite earning a huge sum of Rs. 6.30 crore as capital gains following the sale of an immovable property. They did not pay the tax liability arising out of the transaction either. Further, the two assesses had falsely claimed that the taxes on the capital gains had been paid in the return of income filed belatedly for the 2013-14.
When sleuths from the IT department detected this evasion, prosecution complaints for the assessment year 2013-14 were filed against the above assessees during the year 2016 in the Economic Offences Court, Chennai for failure to file returns of income for 2013-14. The EO Court also framed the charges after taking cognisance of the offences committed by the assessees.
In view of the evidences brought on record by the prosecution, the Additional Chief Metropolitan Magistrate, Economic Offences-I, Chennai held that all the offences stood proved against both the assessees and passed an order convicting the assessees.
The court sentenced both the men independently to undergo rigorous imprisonment for two years and to pay a fine of Rs.50,000/- for each of the offence committed u/s.276CC & 277 and to undergo rigorous imprisonment for an additional two years and a fine of Rs.25,000/- for each of the offence committed u/s.276C(1) & 276C(2) of the Act. The sentences were ordered to run concurrently.
While most of us consider failure to file IT returns or making erroneous or false claims as a minor offence, the Income Tax Act, 1961 classifies several offences as prosecutable under the Act.
They include:
- Removal, concealment, transfer or deliver of property to prevent tax recovery
- Failure by the liquidator of a company
- Failure to pay/ensure payment of TDS or DDT to the credit of the government
- Failure to pay the tax collected under the provisions of section 206C
- Wilful attempt to evade tax, penalty or interest
- Wilful failure to furnish return of income
- Wilful failure to produce accounts and documents under section 142(1) or to comply with a direction issued under section 142(2A)
- Delivery of a false statement
- Enabling another person to evade tax, penalty or interest
- Abetment of false return, account etc.
- Disclosure of particulars by public servants
- Punishment in case of offence by a company
- Punishment in case of offence by Hindu Undivided Family
According to the information shared with the Parliament of India, the Income Tax Department, between 2016-17 to 2020-21, has filed 10690 cases under various sections of Income Tax Act 1961, out of these 7011(66 %) cases have been compounded and only 261(2.44 %) persons have been convicted.
“But that doesn’t mean, we can’t or won’t prosecute smaller evasions, sometimes the department also takes up cases were the evasion is not huge like in this case.”
Income Tax official
Speaking on condition of anonymity, an IT official said that the rate of conviction was quite low as the department takes up only high-profile cases for evasion of tax even though lakhs of people commit various offences under the Income Tax Act. “But that doesn’t mean, we can’t or won’t prosecute smaller evasions, sometimes the department also takes up cases were the evasion is not huge like in this case,” he said.